Weekly raw material market review (August 10th – August 16th)

During the past week, prices in the domestic raw material market continued to decline across various categories, with some experiencing even larger drops. Iron ore prices saw a significant decline, while coke prices remained stable with slight drops. Coking coal prices mostly fell, and most ferroalloy market categories continued their downward trend. Below is a summary of the price movements for the main commodities:

Imported Iron Ore Prices Plummeted:

Last week, the price of imported iron ore dropped sharply. With steel enterprises generally facing significant losses and no improvement in the sales of finished steel products, their willingness to replenish iron ore inventories remained weak, and most continued to maintain low stock levels. Severe losses among traders, coupled with high financial pressure, led to low-priced selling, accelerating the decline in iron ore prices. Overall, market transactions were moderate. The main port inventories of iron ore continued to decrease, primarily due to a slight reduction in recent arrivals. To reduce production costs, steel enterprises further decreased the proportion of high-grade resources like Carajás fines, narrowing the price gap between medium and high-grade resources. As the blast furnace operating rate declines, overall demand for iron ore is also dropping, leaving the fundamentals relatively weak. However, after a round of rapid price declines, steel enterprises with low inventories may make small purchases, so it is expected that the downward trend in iron ore prices will slow in the near future.

HAIHAO GROUP

Domestic Metallurgical Coke Prices Fell Slightly:

Last week, domestic metallurgical coke prices remained stable with some slight drops. Coke enterprises in regions such as East China, North China, Northeast China, and Northwest China initiated the third round of price cuts, with prices falling by 100–110 RMB/ton. In the Central South region, coke enterprises with monthly pricing kept prices stable, while in the Southwest region, steel enterprises with bi-weekly pricing reduced the purchase price of metallurgical coke by 100 RMB/ton. Both supply and demand for metallurgical coke continued to decrease. Data shows that the weekly average daily output of hot metal from 221 sampled steel enterprises decreased by 26,900 tons, while the capacity utilization rate of 200 independent coke enterprises fell by 0.09 percentage points to 76.27%. The total inventory of metallurgical coke in coke industry chain enterprises increased by 152,000 tons, and the number of days that 80 steel enterprises could rely on their coke inventory increased by 0.2 days. Steel prices weakened, market sentiment remained subdued, and the declining price of coking coal weakened cost support for metallurgical coke. Steel enterprises still have intentions to lower coke prices and plan to shorten the price reduction cycle. It is expected that domestic metallurgical coke prices will continue to fall in the near future.

Domestic Coking Coal Prices Mainly Declined:

Last week, domestic coking coal prices mainly fell, and online auction transactions were poor. In Shanxi, Linfen’s low-sulfur coking coal prices fell by 40 RMB/ton to 1,720 RMB/ton; Luliang’s fat coal prices dropped by 100 RMB/ton to 1,600 RMB/ton; and Changzhi’s lean coal prices fell by 70–100 RMB/ton. In Shaanxi, Zichang’s gas coal prices ranged from 1,120–1,170 RMB/ton, and Huangling’s gas coal prices dropped by 20 RMB/ton to 1,150 RMB/ton. The online auction performance for coking coal was unsatisfactory, with some low-sulfur coking coal auction prices falling more than 300 RMB/ton below the long-term contract prices, putting pressure on the sales of long-term contract resources. Coke enterprises have strong expectations of further coking coal price cuts and are reducing procurement, with some coke enterprises in Shanxi reducing their coking coal inventories. It is expected that coking coal prices will continue to remain stable with some declines in the near future.

Ferroalloy Market Prices Mostly Declined:

Last week, prices in the ferroalloy market mostly fell. Silicon iron prices continued to decline, with a cumulative drop of 200 RMB/ton. Hebei Iron & Steel Group’s August silicon iron bid price was set at 6,630 RMB/ton, down by 420 RMB/ton compared to July. The futures price of silicon iron saw a significant downward trend, and inventory in delivery warehouses decreased by 2,400 tons. The profits of production enterprises were halved, leading to a gradual reduction in output. It is expected that the domestic silicon iron market will run with weak fluctuations in the near future. Silicon manganese factory prices fell by 100–150 RMB/ton. Hebei Iron & Steel Group’s August silicon manganese purchase price was set at 6,100 RMB/ton, down by 1,550 RMB/ton from July. The price of manganese ore at ports dropped by 1–8 RMB/ton degree, and the price of chemical coke fell by 50–80 RMB/ton, further lowering the production costs of silicon manganese. Currently, cost support for silicon manganese has weakened, and it is expected that the silicon manganese market will remain weak in the near future.

HAIHAO GROUP

High-Carbon Ferrochrome Prices Remained Stable:

Yuanli Metal’s new procurement price for high-carbon ferrochrome processed blocks was set at 9,126 RMB/50 base tons, down by 154 RMB/50 base tons compared to July’s pricing. The spot price of chrome ore at ports remained stable, with slight decreases in production costs for high-carbon ferrochrome. Most high-carbon ferrochrome production enterprises are primarily fulfilling orders from steel enterprises, with moderate transactions in the retail market, leading to a stalemate in high-carbon ferrochrome prices. It is expected that the high-carbon ferrochrome market will remain stable in the near future.

Vanadium Alloy Prices Declined Slightly:

Vanadium alloy prices dropped by 1,000–2,000 RMB/ton, with Shaogang and Egang’s vanadium nitrogen alloy bid prices ranging from 117,000–122,000 RMB/ton, and steel enterprises’ vanadium iron bid prices ranging from 86,800–89,000 RMB/ton. The price of 98-grade vanadium flakes fell by 2,500–3,000 RMB/ton. On one hand, fewer steel enterprise bids were seen in mid-August, and with falling downstream steel prices, steel enterprises lowered their vanadium alloy bid prices. On the other hand, raw material prices also fell, weakening cost support for vanadium alloys. With steel enterprises still under maintenance and reducing production, demand is unlikely to improve in the short term. It is expected that vanadium alloy prices will decline slightly in the near future.

Molybdenum Alloy Prices Remained Stable:

The price of 60-grade ferromolybdenum remained stable, with Taigang, Qingshan, and Xianggang steel enterprises’ ferromolybdenum bid prices ranging from 232,000–236,000 RMB/ton. The price of molybdenum concentrate with a 45–47% grade also remained stable. Molybdenum alloy manufacturers are still operating at a loss and are cautious in purchasing molybdenum concentrate. The bid prices of downstream steel enterprises saw slight increases. It is expected that the molybdenum alloy market will experience fluctuating conditions in the near future.